29 December 2010

Our Hearts Bleed

An interesting comment appeared on economicus ridiculous to my post about anti-HST sentiment plummeting.

Actually, the HST screwed my mother-in-laws [sic] best friend out of 15 thousand dollars when she sold her last home. She was looking to move into a retirement home and already had to sell her house at a reduced rate because of the poor shape of the economy. She got double dinged by the HST. It's a shame.

Yes, such a shame.

Let's look at the math, shall we? From my response:

There is no HST applied in BC to the prices of resale homes. It is only applied to real estate fees, which were already subject to the 5% GST.

In other words, your mother-in-law's friend would have paid an additional 7% on the real estate fee only. If she paid $15,000 more than she'd have paid otherwise, then we can calculate that the real estate fee alone was $214,285.71.

Real estate fees are usually set at 6%. Assuming that's correct in this case, the house sold for $3,571,428.50.

Had the real estate fee been less than 6%, the situation would be even worse in terms of this woman making a case that she was hard done by. At a 5% rather than 6% real estate fee, the sale price of her "last home" (how many did she turn over for investment purposes?) would be $4,285,714.20.

It behooves me also to point out that someone with a multi-million dollar house likely engages in activities or uses services that the rest of us plebes do not; at the least, she makes use of them far more often. For example:

A multi-million house consumes more energy than the poor abodes which house the rest of us. The drop in tax on residential electricity and heating from 5.4% to 5% would save someone owning such a house a bundle.

For people who travel in BC, the 13% hotel room tax has been reduced to 12%.

For rental vehicles, one no longer pays the $1.50 per day Passenger Vehicle Rental Tax.

For people you enjoy wine, beer or other alcoholic beverages on the many occasions they dine out, the 10% PST charged previously has been reduced to 7%.

For people who purchase vehicles priced over $55,000, the higher PST rate of 10% is gone. Now it's 7%.

If that shiny new vehicle runs on propane, the motor fuel tax no longer applies.

If one's family income derives from owning a business, one likely has saved from the conversion to the HST from the combined PST+GST. It's well known that the HST saved most businesses money.

Do Daphne and I bleed for the poor woman who had to pay $15,000 more in tax for the sale of her $3.57 MILLION investment home? NO. (The annual income of each of our households is two-thirds that amount: $10,000.)

Chrystal Ocean: Social libertarian; democratic reformer; passionate activist for housing reform, especially for changes in property laws to be more inclusive of housing alternatives; atheist; founder of a group run by and for women in poverty, author of several blogs and a book. Contact | Complete profile

Daphne Moldowin: I have chosen a minimalist lifestyle, am a raw food vegan and an anti-capitalist. For me, less means more freedom: to rage against the machine and to speak my mind. I champion others who have small voices. Complete profile